Banks Refocusing on Production, Employment

The Iranian banking system will focus on increasing production and improving employment in the current fiscal year in line with the guidelines provided by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei.

In light of the fact that this year has been named after Resistance Economy: Production and Employment, Central Bank of Iran Governor Valiollah Seif said, “We hope that with the cooperation of the banking system, we can realize the set targets,” the official website of CBI reported.

Seif, who was meeting with the chief executives and board members of banks and credit institutions, referred to the performance of the banking system in allocating loans to small- and medium-sized enterprises as positive.

“In line with this goal, provincial task forces were formed to remove obstacles to production and by the end of the previous year, more than 170 trillion rials ($4.53 billion) were allocated to about 24,000 SMEs,” he said, adding that the banking system must maintain its supportive approach toward these businesses.

Backing the ailing SMEs was one of the main priorities of the central bank during the previous year, with 160 trillion rials ($4.26 billion) earmarked for them from the beginning of the year. The bank succeeded to surpass that target.

The CBI governor, who also heads the Money and Credit Council, pointed out that some people mistake this total number as the only loans allocated to the production sector.

“This is while during the first 11 months of the previous year (March 20, 2016-February 18, 2017), the banking system doled out over 4.77 quadrillion rials ($127.2 billion) to different economic sectors, about 64% of which were allocated to meet working capital demands in manufacturing units,” he said.

According to Seif, reforming the lack of balance in the ratio of incomes to expenses and assets to debts is one of the most important changes that must be made.

Noting that the upcoming presidential elections on May 19 make this a very critical year for the country’s banking system and economy, he added that implementing the reforms requires total discipline and unity among CEOs, board members and shareholders of banks.

Seif also spoke of the central bank’s new oversight plan for the banking system, saying it is ready to become operational.

The plan will set the grounds for a more effective and less costly oversight, but “the main part of it must be made operational with the cooperation of the banks”, he added.